Horace Mann Educators Corporation, an insurance and retirement solutions company for US educators and school employees, has reported a net income of $14 million for the third quarter of 2022, a 14.7% decrease from last years $16.3 million.
The company’s Property & Casualty (P&C) net premiums written were slightly above last year’s third quarter, as they moved to $166.4 million from $163.8 million.
Additionally, the segments combined ratio improved to 107.5% from 112% from the same period last year.
Property underlying loss ratio was 53.3%, compared to 43.5% from last year’s third quarter. Horace Mann stated that the increase was due to higher non-catastrophe water and fire losses.
Meanwhile, the company’s Life & Retirement segment core earnings were down 33.5%, as they decreased from $19.1 million, to $12.7 million for the quarter. The company noted that this was due to a decline in the net interest margin.
In addition, charges and fees on variable annuities and asset-based accounts were lower due to market volatility. Higher mortality was offset by lower operating expenses. Adjusted core earnings, which excludes DAC unlocking, were down 30.3%.
“This year’s back-to-school season brought more agents back into schools to share Horace Mann solutions, meet with teachers, and provide financial wellness education, letting Horace Mann showcase our commitment to educators’ financial success,” said Horace Mann President and CEO Marita Zuraitis.
“We’re pleased with this return to a more normal operating environment, even as Horace Mann’s results — along with those of the entire insurance industry — have been impacted by inflation and financial market volatility.
“Better access was key to the improved momentum we saw throughout the quarter. Agents are reporting strong interest from educators in our financial workshops on topics like Student Loan Solutions and financial wellness. These events often lead to new household relationships that support our sales growth.
“In addition, we are seeing progress in a variety of ways across the business; for example, voluntary supplemental sales rose 10%, auto sales were also up, largely in states where we are confident in the outlook for pricing, and application counts for individual life policies during back to school have been above last year.”
Zuraitis continued by addressing how the P&C segment underlying loss ratios reflected inflationary pressures.
“As the impact of inflation continues to unfold, our rate plans for auto and property have become more aggressive, both in size and timing, and will continue to evolve as circumstances warrant. In addition to rate action implemented in the first nine months of 2022, we now expect to increase auto rates by 15% to 16% over the next five quarters. We believe this plan – bolstered by non-rate underwriting actions – will result in a seasonally adjusted auto combined ratio under 100 by the fourth quarter of 2023. Further, we expect to increase property rates by 8% to 9% over the next five quarters, on top of increases of 7% to 8% due to higher coverage values. The combination should result in an overall average property premium increase in 2023 in the mid-teens.
“Finally, financial market volatility continues to be a headwind across the entire insurance sector. While each of our segments is benefiting from rising new money yields in our core investment portfolio, this has been offset by returns below our historical average for our limited partnership fund portfolio. In addition, the Life & Retirement segment continues to experience lower charges and fees on variable annuities and asset-based accounts, as well as market-performance related DAC unlocking.”
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